Allowed

FPA-PMLA-3000/DLI/2019 of Shri Karti P. Chidambaram v/s The Deputy Director Directorate of Enforcement, Delhi

ATFP3 Sept 2019FPA-PMLA-3000/DLI/2019

Case brief

AI extract

What is this about?

The Appellate Tribunal confirmed an interim order on 01.08.2019 dismissing the stay applications filed by the appellant. The appellant challenged the issuance of a notice under section 8(4) and sought stay of attachment and possession proceedings while an appeal was pending. The Tribunal allowed the continuation of the attachment and stay of disposal. Relief null.

What the court decided

AI extract

FPA-PMLA-3000/DLI/2019 of Shri Karti P. Chidambaram v/s The… — Money Laundering | ATFP (2019)

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APPELLATE TRIBUNAL FOR SAFEMA, FEMA, PMLA, NDPS & PBPT ACT AT NEW DELHI

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MP-PMLA-6287/DLI/2019 MP-PMLA-5956/DLI/2018 (Stay) FPA-PMLA-3000/DLI/2019

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ShriKarti P. Chidambaram … Appellant/Applicant Versus The Deputy Director Directorate of Enforcement, Delhi … Respondent

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Advocates/Authorized Representatives who appeared For the appellant : Shri Dayan Krishana, Sr. Advocate with ShriArshdeep Singh, ShriSanjeevi, ShriAkshat Gupta &ShriJayant Mohan Verma, Advocates For the respondent : ShriAmitMahajan, Advocate/ Standing Counsel ShriNiteshRana, Advocate along with I.O. CORAM JUSTICE MANMOHAN SINGH : CHAIRMAN

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ORDER 03.09.2019

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FPA-PMLA-3000/DLI/2019, MP-PMLA-5956/DLI/2018 (Stay) & MP-PMLA6287/DLI/2019

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On 1^st August, 2019, the following order was passed:-

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“ORDER

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01.08.2019

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FPA-PMLA-3000/DLI/2019

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Page 1 of 8

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FPA-PMLA-3000/DLI/2019, MP-PMLA-5956/DLI/2018 (Stay) & MP-PMLA-6287/DLI/2019

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1. The urgent application was mentioned by the learned counsel for the appellant at 11.00 am. on the basis of receipt of notice under section 8(4) of the Act.

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2. At 1.00 O‟clock the learned counsel for the appellant has again mentioned the matter and stated that he has taken the consent from Mr. Rana about the listing of the application at 2.30 p.m.

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3. The application has taken up at 2.30 p.m, apart from the submission made by the learned counsel for the appellant, the learned Senior Counsel has pointed out that press reporting dated 1^st August, 2019 where the factum of notice under section 8(4) has been published in many newspapers. It is stated by the Senior Counsel that Mr. Rana, Advocate appearing on behalf of the respondent has also attributed certain things in the press note. Mr. Rana, the learned counsel for the respondent however has stated that no such statement was ever made by him in the press and he is not aware about the same.

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4. As far as appeal is concerned, the same is listed for 4^th September, 2019.

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5. When the appeal was listed on 23^rd April, 2019, four weeks time was granted to the respondent to file the reply in the appeal as well as in the interim application within four weeks. As far as appeal is concerned; the same was filed on 29^th May, 2019, however, no reply to the interim application has been filed. The appeal was fixed for hearing on 4^th September, 2019 but in the meanwhile, the notice under Section 8(4) has been issued. Both the counsels have addressed their argument in the pending application being no. 5956/2019 and fresh application filed after the receipt of notice under section 8(4) of the Act.

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6. Order reserved in both applications. Till the order pronounced, parties shall maintain the „status quo‟ as of today.

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7. Copy of the order be given „dasti‟ to both the sides.”

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By this order, I shall dispose of the stay applications filed by the appellant i.e. MP no. 5956/2019 as well as thefresh application filed by the appellant after receipt of notice under Section 8(4) issued by the respondent. The appeal is already listed for hearing on 4.9.2019.

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FPA-PMLA-3000/DLI/2019

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Page 2 of 8

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The prayer made in both the pending applications is opposed by Mr. AmitMahajan and Mr. NiteshRana. It is submitted by Mr. AmitMahajan that once the confirmation order is passed, the next step is to take the possession under the provisions of sub-section 4 of Section 8 of the Act. It is submitted by him that unless the strong case is made out, no interim order can be passed. As far as the jurisdiction of this Tribunal to pass the interimorder is concerned, it is not denied by Mr. AmitMahajan that under this Act, this Tribunal has got the power to pass the interim order in the appeal.

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Section 35 of PMLA provides the procedure and powers of the Appellate Tribunal who shall not be bound by the procedure laid down by Code of Civil Procedure, but shall be guided by the principles of natural justice and subject to the other provisions of this Act. The Appellate Tribunal shall have powers to regulate its own procedure. One of the main objects and reasons of this Act is to confiscate of proceeds of crime apart to the criminal liability if the accused has committed under the provisions of this Act and schedule offense. Thus, the jurisdiction of this Tribunal exists till the time final order is passed by the Special Courts. No doubt, if a valid case is made by ED, the proceeds of crime is to be preserved so that after final order, it should be confiscated for the benefit of Stateor subject to other condition if the person concerned is likely to conceal the proceed of crime as per material placed on record, even the possession of property can also be taken under the provisions of the Act.

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Before this Act came into existence, it has been noticed that “person concerned” used to dispose of proceeds of crime till the time final orders are passed under the Schedule Offence. Therefore, in order to secure the proceeds of crime, the PMLA was brought by the Parliament. The main purpose is some directions are needed to be passed in appropriate cases to preserve the proceeds of crime. The intent of the provisions of PMLA on this issue is akin to the provisions of Order XXXVIII of code of Civil Procedural are read meaning

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FPA-PMLA-3000/DLI/2019

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Page 3 of 8

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manner it appears that the objects and reasons of PMLA to preserve the proceeds of crime to somehow similar.

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Order XXXVIIII provides the remedy of arrest and attachment before judgment. Under Sub-section (1) of the said provision mandates that any stage if the defendant has absconded or left the local limit of the jurisdiction or is about to abscond or leave and has disposed of his property or part thereof in order to obstruct the execution of decree against him, the court under those circumstances may issue warrant to arrest to bring him before court and ask him to furnish security for his appearance. If the defendant fails to furnish security under sub-section 4, under sub-section 5 of Order XXXVIII, Cr.P.C, the court if satisfies may direct the defendant for furnish security for production of property in order not to allow the defendant to obstruct the decree.

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The language provisions of Section 5 and 8 of PMLA are not exactly similar, but principles and intend to codify the said provisions remain the same, as prior to PMLA, it was noticed that after conviction, after long period of trial, the “party concerned” used to dispose all of his movable and immovable properties which were acquired from criminal activities.In the present case, there is no material on record to show that the appellant is trying to dispose the property to obstruct the final order or concealing the alleged proceed of crime.

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The right of the property is the constitutional right in terms of Article 300-A. The Supreme Court has held the right of the property as human right also. The object of PMLA is mainly to take the action against the “person concerned”and attach the property, in order to secure the proceed of crime, if prime facie case is made out and confirmation order is sustainable in law.

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FPA-PMLA-3000/DLI/2019

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Page 4 of 8

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The expression of „possession‟ mentioned in the provision of Section 8(4) cannot be treated as „actual physical possession‟ in all matters, unless this Tribunal is of the opinion if false and frivolous is raised by the „person concerned‟ in order to frustrate the trial under PMLA.

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It is argued on behalf of appellant that the aforesaid Notice under Section 8(4) PMLA issued to the Appellantin the end of July, 2019 and during the pendency of the appeal which is listed for hearing a month later, on 04.09.2019. It is stated that the said Act is purely a mala fide exercise of as there is no cause or reason to issue the aforesaid Notice after 4 months from the date of filing of the appeal, except the untenable contents of the aforesaid notice that the Respondent ED is authorized to take the possession of the said premises under Section 8(4) of the PMLA and the aforesaid notice which amounts to depriving the Appellant of his legitimately acquired property, which has no connection whatsoever with the false predicate case registered by the CBI or the instant proceedings by the ED.

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It is also stated that, till date, neither a charge-sheet has been filed by the CBI in the alleged predicate offence nor a complaint has been filed by the ED in the proceedings under PMLA. Therefore, issuance of the aforesaid Notice to deprive the Appellant of his property at this stage, without even the investigation being completed, is wholly misconceived and bad in law.

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It is further submitted that the Appellant is only an owner of 50% undivided share in the said property, and the remaining 50% undivided share vests with his mother SmtNalini Chidambaram. As such, the aforesaid Notice seeking vacation and possession of the premises is bad in law and deserves to the stayed pending disposal of the captioned appeal. It is submitted that Respondent - ED's jurisdiction to register an ECIR is also challenged in the light of the fact that the alleged proceeds of crime that they have identified is only amounting to Rs.10,00,000/- (Rupees Ten Lakhs Only).

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FPA-PMLA-3000/DLI/2019

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Page 5 of 8

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It is the admitted position that the Appellant/Applicant also resides in the said Property, especially now in view of the fact that he is now a Member of Parliament. Further, Ms. Nalini Chidambaram, who is the owner of the remaining 50% of the said Property, is also residing in the said property when in New Delhi. There is no material placed on record by the respondent that the appellant intents to dispose the said property in order to frustrate the proceedings under PML Act. It is not denied that 50% undivided share of the said property owns by the mother of the appellant.

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It is submitted that Impugned Order and the entire attachment proceedings in this case are bad in law for the reasons and grounds mentioned in detail in the captioned Appeal, which are not repeated herein for the sake of brevity. The contents of the captioned appeal and the 1st Stay Application be read as a part and parcel of this application and the same are not repeated for the sake of brevity.

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Earlier, with regard to movable properties, in other appeal nos. FPAPMLA-2268/DLI/2018(Karti P. Chidambaram v/s. DoE, Delhi), this Tribunal passed by consent orders dated 28.05.2018, the interim order was passed in MP no. 4405 and 4406/2018. The said appeal is now listed for final hearing. In the present case also, the appeal is coming up for hearing on 4.9.2019.

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From the record, it appears the following:-

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a) No charge-sheet has been filed by the CBI.

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b) No prosecution complaint under PMLA has been filed against the appellant.

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c) No reply to the interim application was filed by the respondent despite of order dated 23.4.2019 when six weeks time was granted.

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d) The appellant is the owner of only fifty percent undivided share in the said property.

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FPA-PMLA-3000/DLI/2019

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Page 6 of 8

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e) The immovable property attached bearing no.115-A, Block 172, JorBagh, New Delhi-110003 is also enjoyed by wife and daughter of the appellant. Father and mother (who is senior advocate and senior citizens) are also residing in the said premises.

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f) The appeal is already coming up for final hearing on 4^th September, 2019.

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g) There is no evidence to show that the said property was acquired from the proceed of crime. There is also no evidence that the appellant is likely to dispose of property in order to frustrate the PMLA proceedings.

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Mr. AmitMahajan admits that the proceedings of PMLA were initiated by invoking the section proviso of Section 5(1) of the Act. The same are reproduced herebelow:-

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5. Attachment of property involved in money-Laundering.- (1) Where the Director or any other officer not below the rank of Deputy Director authorised by the Director for the purposes of this section, has reason to believe (the reason for such belief to be recorded in writing), on the basis of material in his possession, that-

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(a) any person is in possession of any proceeds of crime; and

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(b) such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under this Chapter, he may, by order in writing, provisionally attach such property for a period not exceeding one hundred and eighty days from the date of the order, in such manner as may be prescribed:

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Provided that no such order of attachment shall be made unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under section 173 of the Code of Criminal Procedure, 1973 (2 of 1974), or a complaint has been filed by a person authorised to investigate the offence mentioned in that Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be, or a similar report or complaint has been made or filed under the corresponding law of any other country:

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FPA-PMLA-3000/DLI/2019

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Page 7 of 8

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Provided further that, notwithstanding anything contained in [first proviso], any property of any person may be attached under this section if the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section has reason to believe (the reasons for such belief to be recorded in writing), on the basis of material in his possession, that if such property involved in money-laundering is not attached immediately under this Chapter, the non-attachment of the property is likely to frustrate any proceedings under this Act.

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2[Provided also that for the purposes of computing the period of one hundred and eighty days, the period during which the proceedings under this section is stayed by the High Court, shall be excluded and a further period not exceeding thirty days from the date of order of vacation of such stay order shall be counted].

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When it was asked to him to produce the reason to belief to satisfy the mandatory conditions of second proviso, it is replied by him that the said issue is the subject matter of appeal which is listed for final hearing and at that time, he would argue the said issue. With regard to query about the undivided share of his mother, no arguments are addressed on behalf of respondent.

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In the light of above, the interim order passed on 01.08.2019 is liable to be confirmed. The prayer made in the applications are allowed. The interim order shall continue till the final disposal of appeal. The statement has already been made that the appellant shall not dispose of the said property and attachment will continue, the same is accepted.

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